FTC Warns Law Firms: Rethink Your Diversity Collaborations

This episode dives into the latest warnings issued by the Federal Trade Commission to major U.S. law firms regarding their participation in diversity certification programs. I outline the broader pattern of executive branch pressure and explore the implications for law firms and media companies. 

Key Topics Covered:  

• FTC Chairman Andrew N. Ferguson’s cautionary letters to 42 law firms participating in Diversity Lab’s Mansfield Certification program, highlighting potential antitrust liability under the Sherman Act and FTC Act. 
• The Mansfield Rule’s origins, modeled on the NFL’s Rooney Rule, and its focus on expanding opportunities for underrepresented lawyers without mandating quotas. 
• Judicial decisions, including Perkins Coie LLP v. DOJ and Jenner & Block LLP v. DOJ, addressing claims of discrimination and political retaliation in the context of diversity initiatives and legal advocacy. 
• The Trump administration’s use of antitrust law to challenge perceived collusion in both legal and media sectors, including scrutiny of media partnerships like the Trusted News Initiative and high-profile media mergers. 
• Broader ideological and regulatory trends, including heightened enforcement, government intervention in media ownership, and ongoing appeals in federal courts. 

Discussion Points: 

• How coordinated diversity efforts may be viewed as labor-market collusion and the legal risks for law firms. 
• The intersection of antitrust law, freedom of speech, and diversity initiatives in shaping the future of legal and media industries. 
• The potential impact of executive orders and regulatory actions on the independence and competitive landscape of law firms and media companies. 

I discuss how law firms and media organizations must adapt to an environment of increased political scrutiny, regulatory enforcement, and ongoing legal challenges. Tune in for the latest in the evolving relationship between private power and government oversight. 

Tom Hagy
Host | Emerging Litigation Podcast

p.s. I know. I said D-O-G instead of DOJ. Speaking is hard. 

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Transcript

FTC Puts DEI On Notice

What The Warning Letters Claim

Mansfield Rule Origins And Goals

Benchmarks, Not Quotas

Antitrust Fears In The Labor Market

Courts Push Back On Attacks

Retaliatory Power And Big Law

Antitrust And The Trusted News Initiative

Media Mergers And Political Leverage

What’s Really At Stake For Firms

Closing And Contact

Tom Hagy 0:10

Hello and welcome to the Emerging Litigation Podcast. I'm your host, Tom Hagy. Today we're going to talk about the FTC warning law firms about diversity certification programs. This time they're alluding to antitrust in the labor market. These warnings are part of a pattern to broaden the pressure and power of the executive branch over law firms and media companies. It appears right now law firms are staying pretty quiet about this, and understandably so, after receiving warnings from the Trump administration that any coordinated efforts, policies, or programs to develop diverse teams could be actionable. Their silence is likely because the latest missive, this one from the head of the Federal Trade Commission, is more along the lines of watch your step than you are breaking the law. Also seeing the writing on the wall, some firms have already scaled back their DEI programs, kind of complying in advance. FTC Chairman Andrew Ferguson sent warning letters to 42 major law firms on January 30th, cautioning that participation in Diversity Lab's Mansfield certification program may expose them to liability under Section 1 of the Sherman Act that prohibits collusion and other agreements that restrain trade. Section two deals with monopolies, as one antitrust lawyer told me. They got that backwards, but anyway. And then also they're saying that these could be could be violations of Section 5 of the FTC Act, which bars unfair methods of competition, including conduct that falls short of a full Sherman Act violation. Now, the FTC framed the issue as a labor market antitrust concern, warning that coordinated DEI-related benchmarks and structured knowledge sharing among competing firms could impair independent decision making and distort competition for legal talent. At the same time, a federal court has weighed in on this Mansfield rule in a different context, rejecting claims that the program creates unlawful quotas. It doesn't. Although that decision doesn't address antitrust, it is relevant to the public conversation about what Mansfield does and does not benchmark when it comes to the legal label labor market. So what is the Mansfield rule, you might ask? I had lived that part. Mansfield was adopted in 2016 by a diversity testing and certification organization called Diversity Lab. This was during their uh there's a group that gets together Women in Law Hackathon to broaden the pool of candidates for leadership roles at America's law firms. The Women in Law Hackathon is a it's an innovation competition kind of like Shark Tank, created by Diversity Lab in partnership with Stanford Law School and Bloomberg Law. Its purpose is to generate new evidence-based ideas to advance women in the legal profession. They named it for uh Arabella Mansfield, who in Iowa in 1869 became the nation's first woman admitted to practice law. Diversity Lab modeled the Mansfield rule on the NFL's 2003 Rooney rule, which requires teams to interview minority candidates for head coaching and senior positions to ensure they received genuine opportunities. The Rooney rule emerged after criticism of the NFL's hiring practices, particularly the 2002 firings of two successful black head coaches. Civil rights attorneys proved that black coaches won more games on average, but were hired less often and fired more frequently. In response, the NFL's Workplace Diversity Committee, chaired by Dan Rooney, owner of the Pittsburgh Steelers, Go Steelers, recommended the rule, which was named in his honor. Like the Rooney rule, the Mansfield rule focuses on expanding opportunity, but with a legal, industry-specific benchmark. Firms must consider at least 30% underrepresented lawyers in candidate pools for promotions and leadership roles. Both rules aim to interrupt structural bias, not by mandating outcomes, but by ensuring that qualified, diverse candidates are consistently included in leadership pipelines. Mansfield Certification Plus recognizes firms that show measurable progress toward the 30% benchmark for considering minority hires. So, you know, this is like uh we got a goal in life, we think diversity is a good thing, uh let's let's make an effort to make more diverse, but we're not gonna mandate, nobody's mandating anything. Uh these are not quotas. And the court uh and a federal court uh uh concluded that as well. Now, the FTC's theory uh and DEI coordination is a potential labor market as polit now the FTC's theory, the DEI coordination is a potential uh labor market collusion. The Trump administration has made it clear that its intentions is to wipe away any and all DEI programs as quote reverse discrimination. There isn't such a thing. In its warning letter, the FTC points to reporting that firms participate in monthly quote unquote knowledge sharing calls. You know, we don't want to share knowledge, uh, especially on calls. Am I editorializing? It's possible. Um these knowledge sharing calls uh are joined by other Mansfield firms and they want to discuss implementation of their different programs. Sounds to me like uh, you know, if you had an HR conference, you know, that's not exactly uh, you know, Sherma gets to gets everybody together, it's hardly collusion. Anyway, the commission suggests that these calls may create avenues for reduced independent decision making. May. It may also they also may facilitate the sharing of competitively sensitive information. They may. I think you get up in the morning, you may break the law, but you know, who's gonna give us a warning letter? Anyway, it may also uh lead to wage suppression wage suppression, the FTC says. The Commission warns that any exchange of pay or benefits information among competitors could harm competition for talent. Okay. The Commission also emphasizes that its letters are not findings of illegality. They're just love notes, uh, but cautioning, but they're just cautionary notes, uh, encouraging firms to review their DEI-related interactions with competing law firms. So watch your step. Despite the seriousness of the warnings, as I said earlier, the law firms have remained silent. I've looked around and I'll keep looking, but of course, they haven't been charged with anything. So, you know, I've never run a law firm. But uh I don't know. You want to send me a, you know, you want to send me a love note or a Christmas card? I don't have to respond. Although it's nice to send back something after after Christmas. Or whatever holidays for those who celebrate. Now, this is uh the the Trump administration's second volley at Mansfield. The first one I alluded to earlier was was lobbed in the context of employment law. Uh but in a 2025 opinion, that's last year, in Perkins CUI versus DOJ, Judge Beryl Howe rejected the government's claim that Mansfield participation reflected discriminatory hiring. Here's a quote: The Mansfield rule expressly does not establish any hiring quotas or other illegally discriminatory practices, requiring only that participating law firms consider attorneys from diverse backgrounds for certain positions. End quote. The judge concluded that the FTC failed to provide any evidence of any anti-discrimination law violations. Uh briefing in the FTC's appeal, of course, uh to the DC circuit uh begins next month in March. The administration's assault on big law firms was a headliner during the first year of President Trump's second term, also last year. Who could forget? An executive order challenged in Jenner and Block versus DOG, go Jenner, was issued with uh the clear intent to punish the firm for the clients it represented, the cases it pursued, and the political viewpoints the administration attributed to it. Judge John Bates decided. The order explicitly criticized, this is the executive order, explicitly criticized Jenner and Bloch for engaging into what it labeled as partisan litigation and for its association with an attorney who had publicly opposed Trump, and it imposed punitive restrictions such as suspending security clearances to the firm, limiting access to federal buildings. They're all very nice, who doesn't want to go there, and pressuring uh agencies and contractors to sever ties with the firm. All measures designed to cripple its ability to function in matters involving the federal government. Anyway, Judge Bates struck down the executive order in full, finding an unconstitutional retaliation that violated the First Amendment's prohibition on government-imposed political orthodoxy and improperly chilled legal advocacy, noting that, quote, few stars are as fixed, end quote, in the Constitution as the rule that no official may dictate what is and what is not acceptable political viewpoints. Of course, the DOJ has appealed, Judge Bates' ruling, to the U.S. Court of Appeals for the D.C. circuit. This also marks at least a second instance of the Trump administration trying to leverage antitrust laws to advance its ideology or orthodoxy-driven policies. The DOJ submitted a statement of interest in favor of alternative media companies who are alleging that mainstream media companies and social media platforms colluded via something called the Trusted News Initiative to suppress alternative content on Facebook, Instagram, LinkedIn, Twitter, and YouTube. The defendant publishers put it this way, though, that they said that this TNI, this trusted news initiative, is merely a media partnership whose goal is to identify and combat disinformation, harmful to the nation's health. This was related to the COVID-19 vaccine, for example. They say it's also harmful to the democratic process because unfounded reports also were circulating, challenging the legitimacy of the 2020 election. This has been repeatedly discredited, and they were merely trying to say, let's keep an eye on some of this stuff that's just false and let's not circulate it. If you want to state it as opinion, that's different. But they were trying to keep keep actual fake news from being being circulated. But the social media companies could do whatever they wanted. Or they could say, good, thanks for letting us know. Now, the case was originally brought in January 2023 by now Secretary of Health and Human Services. It's really hard to say. Robert F. Kennedy Jr., the anti-faxcine children's health defense organization, which Kennedy founded, and a group of these alternative media producers, Creative Destruction Media and TrialSight News are among them. The alternative media companies say they were de-platformed by the publishers and the platform operators because their health care and political views were outside the mainstream. Yeah, that's why. The defendants, the Washington Post, the BBC, the Associated Press, and writers stand by their anti-deform disinformation efforts and say the case fails to meet any of the requirements of the Sherman Act. So this case is pending. I looked up the docket. Not a lot happening right now for some reason, but you can't read too much into that. So we'll keep checking on that case. But anyway, it's just interesting that the uh the government's position is no, uh, the these companies should be free to put on social media things that are absolutely wrong and dangerous. Um I guess I am editorializing. Now these uh let's talk about media mergers, because it's another merging mergers are another key aspect of competition law, uh, whether they're, you know, whether they're going to hurt competition or help competition. Anyway, so these these interventions we're seeing they're part of a broader pattern. Axios has documented Trump's practice of applying regulatory leverage and public pressure to influence media ownership, shaping which companies expand and which stall in merger review. Similar dynamics surfaced in earlier episodes from pressuring regulators on station ownership caps to publicly urging approval of the Next Star Techna merger as a way to counter, quote, fake news competitors. Collectively, these actions demonstrate how the merger review has become another arena in which the administration seeks to reward aligned media companies and disadvantage those as critical, reinforcing the same concerns about retaliatory government power that underlie the federal court's skepticism in the law firm cases. Recent reporting shows that Trump signaled that he would be, quote, involved in evaluating Netflix's proposed $83 billion acquisition of Warner Brothers Discovery, commenting that the deal, quote, could be a problem because the market share would create for the company. Days later, the The Guardian reported that his financial disclosure revealed more than $1 million in bond purchases from Netflix and Warner Brothers Discovery, transacted while the merger awaited regulatory review, raising concerns about potential influence over the process. At the same time, a competing hostile bid by Paramount Skydance, backed financially by Jared Kushner, and connected to Trump-aligned investors, positioned the administration even closer to decisions over who would control CNN, HBO, and other outlets frequently targeted by the president. So stand up or stand down. The White House perceives that they wield excessive influence and have leveraged their positions for financial and strategic gain. So let's say that again. And with a straight face. So by invoking antitrust and other federal laws, the administration signals its determination to challenge what it sees as abuses of power. Abuses of power. We don't like that. Now, whether that's in the context of diversity initiatives within legal, within law firms, or in the operations of major media partnerships, particularly news outlets. So this ongoing scrutiny reflects a broader ideological stance that these institutions and the administration's view have cross lines in ways that justify government intervention, both to restore competition and to curtail perceived outreach in the pursuit of profit and political objectives. You don't want to overreach in your pursuit of profit and political objectives. The outcomes of these disputes are going to shape not only antitrust, freedom of speech, diversity initiatives and employment practices, but the broader relationship between private power and government oversight. It's worth noting that the law firms, all the law firms, they either have the law firms at least were received these letters, they all have robust antitrust practices. So they they're familiar with antitrust. Or they have employment law practices, so they get employment law too. In some cases, some of the firms have both. So there you go. Thanks for listening. Once again, this is Tom Hagy, Emerging Litigation Podcast. If you want to reach out to me, write to me at editor@ litigation conferences.com. Thanks for listening.